Producer Behaviour and Supply-Cost (CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics): Questions 18 - 23 of 47
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Question number: 18
» Producer Behaviour and Supply » Cost
Appeared in Year: 2010
Describe in Detail
Given below is the cost schedule of a firm. Its average fixed cost is Rs. 20 when it produces 3 units.
| Output (units) | 1 | 2 | 3 |
| Average variable cost ( Rs. ) | 30 | 28 | 32 |
Calculate its marginal cost and average total cost at each given level of output.
Explanation
| Output (units) | AVC | AFC | TFC (AFC Q) | TVC (AVC Q) | ATC (AVC +AFC) | TC (TFC + TVC) |
| 1 | 30 | 60 (60/1) | 60 (60 1) | 30 | 90 | 90 |
| 2 | 28 | 30= (60/2) | 60 (30 2) | 56 | 58 | 116 |
| 3 | 32 | 20 (60/3) | 60 (20 3) | 94 | 52 | 154 |
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Question number: 19
» Producer Behaviour and Supply » Cost
Appeared in Year: 2012
Describe in Detail
A producer invests his own savings in starting of a business and employs a manager to look after it. Identify implicit and explicit costs from this information. Explain.
Explanation
Explicit Costs: paid directly in money - money costs. A firm incurs explicit costs when it pays for a factor of production at the same time it uses it.
- Explicit Cost = payments by a firm to purchase the service of productive resources (wages, interest, rent, capital)
- Implicit Costs: measured in units of money, but are not paid for directly in
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Question number: 20
» Producer Behaviour and Supply » Cost
Appeared in Year: 2012
Write in Short
What is the behavior of average fixed cost as output increase?
Question number: 21
» Producer Behaviour and Supply » Cost
Describe in Detail
Why does the difference between Average Total Cost and Average Variable Cost decrease as the output is increased? Can these two be equal at some level of output? Explain.
Explanation
Difference Between Average Total Cost and Average Variable Cost
In this figure show difference between Average Total Cost and Average Variable Cost
In this diagram output level increase and difference between Average Total Cost and Average Variable Cost goes on falling.
Average Total Cost (ATC) minus Average Variable Cost (AVC) is equal to Aver
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Question number: 22
» Producer Behaviour and Supply » Cost
Write in Short
Calculate Total Variable Cost and Marginal Cost from the following cost schedule of a firm whose Total Fixed Costs are Rs. 12
| Output | Total Cost |
| 1 | 20 |
| 2 | 26 |
| 3 | 31 |
| 4 | 38 |
Question number: 23
» Producer Behaviour and Supply » Cost
Describe in Detail
Distinguish between fixed cost and variable cost and give one example of each?
Explanation
| Characteristics | Fixed cost | Variable cost |
| Definition | Fixed costs are costs that do not vary with the level of production. | Variable costs are the costs that do vary with the level of production. |
| When change in cost? | Fixed costs are expenses which in total does not change in proportion to the activity of a business, within the relevant time period. | Variable costs by contrast change in relation to the activity of a business such as sales or production volume. |
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